SAFEGUARD MEASURES - UN ESCAP Measures.pdf · Safeguard measures relate to obligations...
38
SAFEGUARD MEASURES By R. K. GUPTA Former Chairman, Settlement Commission; Director General (Safeguards); and Director, Ministry of Commerce
Transcript of SAFEGUARD MEASURES - UN ESCAP Measures.pdf · Safeguard measures relate to obligations...
SAFEGUARD MEASURES
By
R. K. GUPTA Former
Chairman, Settlement Commission; Director General (Safeguards); and
Director, Ministry of Commerce
Presenter
Presentation Notes
WTO regime-reduction in tariffs and removal of QRs Trade weighted av. tariffs have come down from 6.3% to 3.9% New challenges posed by free flow of trade Safeguard measures refer to emergency action whereby in certain situations trade restrictions can be imposed
SAFEGUARD MEASURES
• MEASURES TO PROTECT DOMESTIC PRODUCERS
• FROM THE ONSLUAGHT OF INCREASED IMPORTS
• ACT AS A SAFETY VALVE MECHANISM
2
WTO FRAMEWORK
ARTICLE XIX OF GATT 1994-EMERGENCY ACTION AGREEMENT ON SAFEGUARDS (AOS) GATT 1994 is “legally distinct” from the GATT 1947-
GATT 1994 and the AOS both being Multilateral Agreements on Trade in Goods contained in Annex 1A of the WTO Agreement, both are “integral parts” of the WTO Agreement, and are “binding on all Members”
3
Presenter
Presentation Notes
To apply safeguard measures in extraordinary emergency situations Balancing the needs of liberalization and protecting the domestic producers
MAIN INGREDIENTS OF ARTICLE XIX OF GATT 1994
UNFORESEEN DEVELOPMENTS
OF THE EFFECT OF OBLIGATIONS INCURRED
ANY PRODUCT BEING IMPORTED IN SUCH INCREASED QUANTITIES AND UNDER SUCH CONDITIONS
CAUSING SERIOUS INJURY OR THREAT THEREOF
TO DOMESTIC PRODUCERS OF LIKE AND DIRECTLY COMPETITIVE PRODUCTS
4
Presenter
Presentation Notes
If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party under this Agreement, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part or to withdraw or modify the concession.
AGREEMENT ON SAFEGUARDS
A COVERED AGREEMENT
CLARIFIES DISCIPLINE OF GATT 1994 AND SPECIFICALLY THOSE OF ARTICLE XIX
ESTABLISHES MULTILATERAL CONTROL OVER SAFEGUARDS BY ESTABLISHING RULES FOR THE APPLICATION OF SAFEGUARD MEASURES
5
Presenter
Presentation Notes
The provisions of both Article XIX of GATT 1994 and the AOS need to be satisfied
UNFORESEEN DEVELOPMENTS
“Unforeseen”, particularly as it relates to the word “developments”, is synonymous with “unexpected”
“Unforeseeable”, on the other hand, is defined in the dictionaries as meaning “unpredictable” or “incapable of being foreseen, foretold or anticipated”
There must be a “logical connection” linking the “unforeseen developments” and an increase in imports
Not referred to in the AOS, but needs to be specifically satisfied
Investigation Report to include a finding on this
6
Presenter
Presentation Notes
In Argentina Footwear, the AB observed that the dictionary definition of “unforeseen”, particularly as it relates to the word “developments”, is synonymous with “unexpected” The Appellate Body took a similar view in the Dairy products case of Korea as in the Argentina Footwear case In Steel case-US, the AB observed that because the “increased imports” must be “as a result” of an event that was “unforeseen” or “unexpected”, it follows that the increased imports must also be “unforeseen” or “unexpected”. Thus, the “extraordinary nature” of the domestic response to increased imports does not depend on the absolute or relative quantities of the product being imported. Rather, it depends on the fact that the increased imports were unforeseen or unexpected.” In Common Fluorescent Lamps case-Egypt withdrawal of a major overseas partner was considered as Unforeseen Development Existence of circumstances constituting Unforeseen Developments must be demonstrated as a matter of fact-Wheat, Wheat Flour and Edible Oil case-Chile
OF THE EFFECT OF OBLIGATIONS INCURRED
Safeguard measures relate to obligations incurred-Reduction in tariffs and removal of QRs
If the increase in imports not because of obligations incurred, remedy would not lie in suspending obligations or in withdrawing concession
7
Presenter
Presentation Notes
In Argentina Footwear case, the AB observed that the phrase “of the effect of the obligations incurred by a Member under this Agreement, including tariff concession”, this phrase simply meant that it must be demonstrated, as a matter of fact, that the importing Member has incurred obligations under the GATT 1994, including tariff concessions. The Schedules annexed to the GATT 1994 are made an integral part of Part I of that Agreement, pursuant to paragraph 7 of Article II of the GATT 1994. Therefore, any concession or commitment in a Member’s Schedule is subject to the obligations contained in Article II of the GATT 1994.
INCREASED IMPORTS
Increase in absolute terms or compared to domestic production
In terms of quantity or value
Compared to a previous level of imports-Base Period or Period of investigation
“Is being imported”
8
Presenter
Presentation Notes
Not merely any increase in imports, but “in such increased quantities … and under such conditions as to cause or threaten to cause serious injury-Footwear Case-Argentina The increase in imports must have been recent enough, sudden enough, sharp enough, and significant enough, both quantitatively and qualitatively, to cause or threaten to cause “serious injury”-Footwear Case-Argentina; Also referred in Steel Safeguards Case-US Article 2.1 does not require that imports need to be increasing at the time of the determination-Rather, the plain meaning of the phrase “is being imported in such increased quantities” suggests merely that imports must have increased, and that the relevant products continue “being imported” in (such) increased quantities-Steel Safeguard Case-US and also Line Pipe Case-US The Panel in Argentina — Preserved Peaches concurred with the Panel in US — Line Pipe that the word “recent” does not imply that the analysis must focus exclusively on conditions at the end of the period of analysis and that there is no absolute formula to determine whether increased imports justify the application of a safeguard measure The likely state of the domestic industry in the very near future can best be gauged from data from the most recent past but although data from the most recent past has special importance, competent authorities should not consider such data in isolation from the data pertaining to the entire period of investigation. The real significance of the short-term trends in the most recent data, evident at the end of the period of investigation, may only emerge when those short-term trends are assessed in the light of the longer-term trends in the data for the whole period of investigation-Lamb Case-US Decline in absolute imports at the end of period of investigation not to be considered in isolation, and does not preclude a finding of imports “in such increased quantities” for the purpose of Article 2.1-Line Pipe Case-US
SERIOUS INJURY
Significant overall impairment of domestic industry
A matter of economic and social judgment
Evaluation of all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry
In particular rate and amount of increase in imports and other listed factors
9
Presenter
Presentation Notes
For invoking a safeguard measure it must be demonstrated that the injury is such, which has had a significant effect on the overall position of the domestic industry Serious injury is a much higher standard than the material injury or material retardation in case of ADD or SCM
FACTORS THAT MUST BE EXAMINED
Rate and amount of increase in imports in absolute and relative terms
Share of the domestic market taken by increased imports
Changes in the level of sales, production, productivity, capacity utilisation, profits, and employment
All other relevant factors
10
Presenter
Presentation Notes
Competent authorities must, in every case, carry out a full investigation to enable them to conduct a proper evaluation of all of the relevant factors expressly mentioned in Article 4.2(a) of the Agreement on Safeguards-Argentina Footwear, Korea Dairy Case and US Wheat Gluten Case Competent authorities’ determination must be based on “an evaluation of the injury factors as a whole” and competent authorities must have a sufficient factual basis to allow them to draw reasoned and adequate conclusions concerning the situation of the “domestic industry-US Lamb Case US — Wheat Gluten Case-Price analysis non-mandatory, but potentially relevant point of analysis
SERIOUS INJURY OR THREAT THEREOF
Facts, as a whole must certainly tend to show that some degree of adverse effect has been caused or threatened
Existence of a threat of serious injury must be based on facts and not merely on allegation, conjecture or remote possibility
Threat of serious injury must be clearly imminent-a high degree of likelihood that the anticipated serious injury will materialize in the very near future.
11
Presenter
Presentation Notes
If the facts, as a whole certainly tend to show that some degree of adverse effect has been caused or threatened, the authorities may well be justified to arrive at a finding of serious injury or threat thereof In the Lamb case-US the Appellate Body observed that the term “threat of serious injury” is concerned with “serious injury” which has not yet occurred, but remains a future event whose actual materialization cannot, in fact, be assured with certainty-The Lamb Case-US The word “imminent” relates to the moment in time when the “threat” is likely to materialize. The use of this word implies that the anticipated “serious injury” must be on the very verge of occurring-The Lamb Case-US Defining “threat of serious injury” separately from “serious injury” serves the purpose of setting a lower threshold for establishing the right to apply a safeguard measure-Line Pipe Case-US
CAUSAL LINK BETWEEN IMPORTS AND INJURY
Serious injury must be caused by increased imports
Injury caused by other factors cannot be attributed to increased imports
To be demonstrated on the basis of objective evidence
Simultaneous injury by other factors
There must be a genuine and substantial relationship of cause and effect
12
Presenter
Presentation Notes
Wheat Gluten Case-US-The phrase ‘under such conditions’ refers to the substance of the causation analysis that must be performed under Article 4.2(a) and (b) of AOS and does not impose a separate analytical requirement in addition to the analysis of increased imports, serious injury and causation. The phrase ‘and under such conditions’ qualifies and relates both to the circumstances under which the products under investigation are imported and to the circumstances of the market into which products are imported, both of which must be addressed by the importing country when performing its assessment as to whether the increased imports are causing serious injury to the domestic industry producing the like or directly competitive products-The Dairy Case-Korea The phrase ‘under such conditions’ would indicate the need to analyse the conditions of competition between the imported product and the domestic like or directly competitive products in the importing country’s market-Argentina Foot Wear Case In the particular context of a causation analysis, it is the relationship between the movements in imports (volume and market share) and the movements in injury factors that must be central to a causation analysis and determination-Argentina Footwear The competent authorities must separate and distinguish the injurious effects of the increased imports from the injurious effects of the other factors-Line Pipe Case-US Imports excluded from the application of the safeguard measure must be considered a factor “other than increased imports”-Steel Case-US
DOMESTIC INDUSTRY
Domestic Producers of ‘like and directly competitive products’
Domestic producers as a whole or a major proportion thereof
Major proportion does not necessarily mean more than 50 percent
13
Presenter
Presentation Notes
The term ‘major proportion’ however, is not defined in the Agreement. It ordinarily means more than 50 percent of the total domestic production, but some authorities consider even less than 50 percent of the total domestic production as a major proportion. This may well be justified as in some cases data in respect of all the domestic producers may not be available or some of the domestic producers may not be willing to co-operate. The scope of the term ‘like and directly competitive products’, however, is very wide and covers not only ‘like products’ i.e., a product alike or similar in all respects to the imported product in question, but also directly competitive products i.e. products which functionally and commercially compete with the imported products and which can be considered as substitute products. Consumers’ perception also is an important factor in this regard. The context of the competitive relationship is necessarily the marketplace since this is the forum where consumers choose between different products. Competition in the market place is a dynamic, evolving process. Accordingly, the wording of the term “directly competitive or substitutable” implies that the competitive relationship between products is not to be analyzed exclusively by reference to current consumer preferences-Korea Alcoholic Beverages Case Products are competitive or substitutable when they are interchangeable or if they offer “alternative ways of satisfying a particular need or taste-Korea Bev. It is irrelevant, under the AOS, that there is a continuous line of production between an input product and an end-product, that the input product represents a high proportion of the value of the end-product, that there is no use for the input product other than as an input for the particular end-product, or that there is a substantial coincidence of economic interests between the producers of these products-Lamb Case-US
APPLICATION OF SAFEGUARD MEASURES
Purpose of safeguard measure is to prevent or remedy serious injury to the domestic industry and to facilitate adjustment
Only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment
Applied on all imports-Customs Union Price based measures Public interest
14
Presenter
Presentation Notes
All imports considered to be causing injury attract Safeguard Measures-Footwear Case–Argentina Imports included in the determinations made under Articles 2.1 (increased imports) and 4.2 (injury) should correspond to the imports included in the application of the measure, under Article 2.2 (measures against all imports)-Wheat Gluten Case-USA Imports originating in member states of a free-trade area cannot be excluded from the scope of a safeguard measure-Line Pipe Case-USA A safeguard measure should be commensurate with the goals of preventing or remedying serious injury and of facilitating adjustment-Korea Dairy There is no upper limit but safeguard measure to be applied only to the extent necessary Public interest is something in which the public or the community at large has some pecuniary interest or some interest by which their legal rights or liabilities are affected. The expression ‘public’ thus pertains to and concerns a multitude of people. The expression ‘right’ means a well-founded claim, an interest, concern, advantage or benefit. Public interest does not mean anything so narrow as mere curiosity or as the interests of a particular locality or a small section of citizens
FORM OF SAFEGUARD MEASURES
Safeguard Duty Import Quotas Tariff Rate Quotas Measures to be prospective; retroactive
application not permissible
15
Presenter
Presentation Notes
If a safeguard measure is applied in the form of import quotas, the quantity cannot be less than the average of previous three years, with a progressive liberalization
PROVISIONAL SAFEGUARD MEASURES
Existence of critical circumstances where delay would cause damage which it would be difficult to repair
A preliminary determination that there is clear evidence that increased imports have caused or are threatening to cause serious injury
They can be applied only in the form of duties, The duration is restricted to 200 days This period of 200 days shall be counted as a part of
the total period
16
Presenter
Presentation Notes
Acetylene Black Case-India: Closure of production facilities and loss of man-days constituted critical circumstances Sugar Case-Czech Republic: Developments in world market and excessive production capacities considered relevant Frozen Garlic Case-Republic of Korea: Continued increased imports likely to create unfavorable conditions Swine Meat Case-Slovenia: Sharply increasing imports-a critical situation
DURATION OF SAFEGUARD MEASURES
Emergency actions and, therefore, of limited duration
Initial period shall not exceed four years
This initial period takes into account the period of provisional safeguard measures
Can be extended to a maximum of eight years (ten years for developing countries)
Can be reapplied after mandatory period
17
Presenter
Presentation Notes
Chilean Safeguard Measures on Wheat, Wheat Flour and Edible Oils-Panel held that Article 7 of the Agreement on Safeguard makes it clear that what is at issue is not an extension of ‘Safeguard measure’, but rather, an extension ‘of the period of application of the safeguard measure’ or of ‘the duration of the safeguard measure’. ‘Extensions’ are not distinct measures but merely continuations in time of the definitive safeguard measures’ Not to be reapplied for a period of time equal to that during which such measure had been previously applied, provided that the period of non-application is at least two years. However, the Agreement allows for a measure to be applied again on the import of a product if its duration was 180 days or less, subject to the conditions that at least one year has elapsed since the date of introduction of a safeguard measure, and such a safeguard measure has not been applied on the same product more than twice in the five-year period immediately preceding the date of introduction of the measure
POSITIVE ADJUSTMENT, PROGRESSIVE LIBERALIZATION AND REVIEW
Positive adjustment by the domestic industry
Progressive liberalization of safeguard measure where the duration is over one year
Mid-term review where the duration of safeguard measure exceeds three years
18
Presenter
Presentation Notes
Where expected duration of a safeguard measure is over one year, the Member applying the measure shall progressively liberalise it at regular intervals during the period of application Korea — Dairy rejected the view that Article 5.1 imposes an obligation to consider adjustment plans The AOS envisages a progressive liberalisation of the safeguard measures with a view that the industry may gradually adopt itself to the new situation of competition offered by increased imports Safeguard measure cannot be enhanced on review
COMPENSATION AND RETALIATION
Compensation to maintain a substantially equivalent level of concessions and other obligations to that existing under GATT
Members concerned may agree on any adequate means of trade compensation
If no agreement reached on consultation, the affected exporting Members can retaliate
19
Presenter
Presentation Notes
Article 8 of AOS provides for maintaining a substantially equivalent level of concessions and other obligations to that existing under GATT-To achieve this objective, the Members concerned may agree on any adequate means of trade compensation for the adverse effects of the measures on their trade, for example, a Member may offer tariff concession on some other product Line Pipe Case-US: In the Line Pipe case-US, the Appellate Body observed that “reaching such an “understanding” [on ways to achieve the objective set out in paragraph 1 of Article 8] serves the interests not only of the exporting Members, but also of the importing Member, who will wish to avoid excessive compensatory measures in response to the safeguard action If no agreement is reached within 30 days, then the affected exporting Members shall be free, not later than 90 days after the measure is applied, to suspend upon the expiration of 30 days the application of substantially equivalent concessions or other obligations under GATT, the suspension of which the Council for Trade in Goods does not disapprove. However, in cases where the safeguard measure has been taken as a result of an absolute increase in imports and in conformity with the provisions of the Agreement on Safeguards, this right shall not be exercised for the first three years that a safeguard measure is in effect.
SPECIAL AND DIFFERENTIAL TRETMENT FOR DEVELOPING COUNTRIES
Safeguard measures not to be applied on imports originating in a developing country if its share < 3 %, provided that such imports collectively are < 9 %
Can extend the period of application up to two years beyond the maximum period (i.e. 10 years instead of 8 years)
Can reapply safeguard measures after a period of time equal to half that during which such a measure has been previously applied, provided that the period of non-application is at least two years
20
Presenter
Presentation Notes
In the Line Pipe case-US, the Appellate Body observed that Article 9.1 does not indicate how a Member must comply with this obligation. There is nothing, for example, in the text of Article 9.1 to the effect that countries to which the measure will not apply must be expressly excluded from the measure. Although the Panel may have a point in saying that it is “reasonable to expect” an express exclusion, there was nothing in Article 9.1 that requires one
SPECIAL SAFEGUARD MEASURES FOR AGRICULTURAL PRODUCTS
AOS applies to all products, including agricultural products
For agricultural products ‘Special Safeguard Measures’ can be taken as per Article 5 of the AOA
Such an agricultural product should have been designated in the Member’s Schedule of Concessions with the symbol “SSG”
The extent of duty would depend upon trigger level of volume and trigger prices
21
TRANSITIONAL PRODUCT SPECIFIC SAFEGURD MEASURES AGAINST IMPORTS FROM CHINA
Generally same requirements but certain flexibilities given for imposition of product specific transitional safeguards against imports from China
‘Market disruption’ instead of ‘Serious Injury’ Market disruption shall exist whenever imports
are increasing rapidly so as to be a significant cause of material injury, or threat thereof
No requirement of ‘Unforeseen Developments’ or of ‘Progressive Liberalization’
22
SAFEGUARD MEASURES UNDER RTA/PTA/FTA
Safeguard measures under RTA/PTA/FTA can be taken in terms of the provisions contained in the RTA/PTA/FTA
Such protective measures, though in the nature of safeguard measures, are not the safeguard measures under the AOS but as per specific provisions of RTA/PTA/FTA
Remedy is restricted to the withdrawal of the concessions granted under the RTA/PTA/FTA
23
INVESTIGATION PROCEDURE
No safeguard measures without investigation Initiation of investigation:
On application by domestic industry Suo Motu
Public Notice of Initiation Interested parties-their rights and obligations Public files Public hearings Public notice of any provisional findings or final
findings
24
Presenter
Presentation Notes
The WTO Members have bound their tariffs at the rates as reflected in their respective Schedules of Concessions. For example, Myanmar has bound customs duty on ‘Shorn Wool’ (Chapter Heading 510111) at 10%. They have also committed not to impose quantitative restrictions on imports except in certain special circumstances, for example under Article XVIII of GATT for balance of Payment purposes. These obligations incurred by them cannot be withdrawn or modified by them unilaterally, i.e. ordinarily they cannot raise tariffs beyond the bound rates nor can they impose quantitative restrictions. They can, however, raise the tariffs or impose quantitative restrictions on any product under the Agreement on Safeguards, for a temporary period of time as a Safeguard measure Article 3.1 of the AOS stipulates that a Member may apply a safeguard measure only following an investigation by its competent authorities pursuant to procedures previously established and made public in consonance with Article X of GATT 1994 Article X of GATT 1994 sets disciplines concerning Publication and Administration of Trade Regulations Information in application: The description of the product, domestic production, domestic production accounted for by the applicants, volume of imports, the price of imports, in particular where there has been a significant price undercutting as compared with the price of a like product, and the consequent impact on certain economic factors such as: Production, capacity utilisation, Stocks, Sales, Market share, Prices (i.e. depression of prices or prevention of price increases which would have normally occurred), Profits, Return on capital employed, Cash flow, and Employment; Relief sought; and Effort to make positive adjustment; Critical circumstances-in case provisional measure sought
CONFIDENTIAL INFORMATION
Information supplied by any party on a confidential basis
Information which is by nature confidential Not to be disclosed without permission of party
submitting it Non-confidential summaries or reason why it
cannot be done Authorities may disregard such information
unless it can be demonstrated that the information is correct
25
Presenter
Presentation Notes
Information such as cost of production may by nature be treated as confidential information. Similarly, information like details of customers etc. may be treated as confidential information, if the disclosure of such information may adversely effect the interest of the party concerned (i.e. the competitors may take advantage of an established market by winning over such customers)
DISPUTE SETTLEMENT
Consultation WTO consistency of the safeguard measure can
be questioned before the dispute settlement body of the WTO
Panel can examine both a provisional measure, as well as the final measure
Panels not to conduct a de novo review of the evidence, nor to substitute their own conclusions
Panel to find whether an explanation is reasoned, or is adequate
26
Presenter
Presentation Notes
In the Line Pipe case-US, the Appellate Body observed that Article 12.3 requires “a Member proposing to apply a safeguard measure to provide exporting Members with sufficient information and time to allow for the possibility, through consultations, for a meaningful exchange”
NOTIFICATION TO WTO COMMITTEE ON SAFEGUARDS
Upon initiating an investigation process relating to serious injury or threat thereof and the reasons for it
Making a finding of serious injury or threat thereof caused by increased imports
Taking a decision to apply or extend a safeguard measure No prescribed format of Notification but Notification to
include information on Serious injury or threat thereof caused by increased imports; Precise description of the product involved; The proposed measure; and Proposed date of introduction, expected duration and time table for
progressive liberalization In cases of extension of a measure, evidence that the industry
concerned is adjusting shall also be provided
27
Presenter
Presentation Notes
Notifications must be made “immediately … upon” the occurrence of the triggering events-Wheat Gluten Cse-US In the Dairy case-Korea, the Appellate Body observed that the text of Article 12.2 makes it clear that a Member proposing to apply a safeguard measure is required to provide the Committee on Safeguards with all pertinent, not just any pertinent, information. Moreover, it provides that such information shall include certain items listed immediately after the phrase “all pertinent information”, namely, evidence of serious injury or threat thereof caused by increased imports, a precise description of the product involved and the proposed measure, the proposed date of introduction, the expected duration of the measure and a timetable for progressive liberalization. These items, which are listed as mandatory components of “all pertinent information”, constitute a minimum notification requirement that must be met if a notification is to comply with the requirements of Article 12
ROLE OF DOMESTIC INDUSTRY
Collect complete information about all domestic producers
Collect authentic data of the quantum and value of imports
Should seek a consensus among themselves Identify injury parameters clearly and segregate
injury caused by increased imports Draw plans to make positive adjustment Be ready for verification of information provided Co-operate with the investigating authorities Make a fully substantiated application at the earliest
28
ROLE OF GOVERNMENT AGENCY
Appointment of an investigating authority
Maintain an authentic import data base
Represent interests of SMEs
To meet with the WTO notifications requirements
To consider the recommendations of the investigating authority and decide whether or not to impose safeguard measures
Enter into consultations
29
PRECAUTIONS TO BE TAKEN
Safeguard measure must comply with the provisions of both Article XIX of GATT and the Agreement on Safeguards (AOS)
Investigation report must specifically record a finding regarding unforeseen developments
Safeguard measures shall be applied to all imports except de-minimis imports from developing countries
The type of measure, its level and duration needs to be restricted only to the extent necessary to remedy or prevent serious injury and allow for readjustment
30
PRECAUTIONS TO BE TAKEN
The intervening trends of imports over the period of investigation need to be analyzed
Investigating authorities must examine recent imports, and not simply trends in imports
Circumstances under which increased imports are entering and the circumstances of the market must be addressed
There are different ways in which products can compete-sales price clearly is one, but not the only one
31
PRECAUTIONS TO BE TAKEN
Investigating authorities must evaluate factors specifically mentioned in the Agreement
They must examine all other relevant factors as well
If the competent authorities consider that a particular ‘other factor’ may be relevant to the situation of the domestic industry, they must consider the same
They must also give a finding that the concerned domestic industry has undergone a ‘significant overall impairment’
32
PRECAUTIONS TO BE TAKEN
For data to be “objective and quantifiable”, such data would have to be both sufficient and representative of the domestic industry
Interested parties play a central role in investigation and are primary source of information-they must be given full opportunity
Investigation report must include an explanation of the rationale for the determinations from the facts and data contained in the report
Confidential information must be protected
33
PRECAUTIONS TO BE TAKEN
A determination of a threat of serious injury is to be based on facts and not merely on allegation, conjecture or remote possibility
Identification of ‘like or directly competitive’ products is the first step to identify the ‘producers’ of those products
Safeguard measures to be applied only to the extent necessary
34
ADD, CVD and SGD
Goods imported-LED TVs 26” Import Price-160 US$ Import Duty-25% Landed Price-160+40 (25% of 160=40) =200 Price at which sold in the domestic market of
exporting country-220 Sale price of 26” LCD TVs-225 US$ Price difference between LED and LCD TVs-US$
15
35
ADD, CVD and SGD
Case-1 Difference between US$ 220 and 160 = US$ 60 US$ 20-Domestic tax rebate (Taxes borne on inputs) US$ 40-The loss in export sales borne by the exporter Case-2 Difference between US$ 220 and 160 = US$ 60 US$ 20-Domestic tax rebate (Taxes borne on inputs) US$ 40-On account of tax relief on export income
and cheaper finance for export production etc.
36
ADD, CVD and SGD
Case-3
Import Price-160 US$; Import Duty-25%
Landed Price-160+40 (25% of 160=40) =200
Price at which sold in the domestic market of exporting country-160 US$
Sale price of 26” LCD TVs-225 US$
Price difference between LED and LCD TVs-US$ 15
Injury to domestic producers (225+15=240) 240-200=40US$ or 40/160=25%
37
Safeguard Duty, Positive adjustment and Progressive liberalization
Injury of US$ 40 on account of:- US$ 10-On account of higher fixed cost, production capacity to be
increased-in 3 Yrs. US$ 15-On account of higher raw material costs-Sourcing from int.
market likely to take two yrs-Benefit flowing 5 and 10 US$ in the first and the second year
US$ 15-On account of debts-It would take three years to convert debts into equity -Benefits flowing US$ 7, 6 and 2 resp. in 3 years
SGD for the first year-25% Benefit flowing at the end of first year-US$ 12; SGD for the second
year-40-12=28/160 i.e. 17.5% Benefit flowing at the end of second year-US$ 16; SGD for the third
year-28-16=12/160 i.e. 7.5% After three years-Nil Mid-term review say after 18 months, SGD then @ 17.5%- Period can
be extended but SGD cannot be > 17.5%
38
